Via Silicon.com, we saw yesterday that the Council for Science and Technology is recommending six technology areas for government funding. One of those areas is distribution networks for low carbon electricity generation “to provide locally generated electricity using renewable and low carbon technology.”

This will bring with it information issues, but I’m not 100% convinced that these IA issues need to be solved by government. I think it will be more of a regulatory issue. I think the bottleneck issue for this will essentially be metering. Assuming that utilities can build temporary storage for electricity generated during non-peak times, government may, as has been done in Germany, mandate purchase of locally generated power at attractive rates, and cause that part of the general public that can respond to start doing so–perhaps in a wholesale manner. (I assume they’ll specify origin of power to insure the whole concept remains green–but how will they monitor and enforce this?)

But this type of forced transaction may not sit well with power companies, many of which are already, well, a bit sluggish (if not thuggish) in their treatment of residential customers. Who will measure the power that John is selling from his farm to British Gas? John or British Gas? How will it be measured? Who will arbitrate? The transaction may require two meters, one for John and one for the utility. Does the utility get compensated for line loss (typically 10%, but could be more for small transmission volumes)?

I think the regulatory scheme will have to be robust. The information assurance issue is trust in the quality of information transmitted and stored about a financial transaction, where there is a marked imbalance between the parties to the transaction.

Will British Gas and its competitors be compensated for having to build power storage facilities (not very efficient, but it’s part of the territory)?

This scheme will require significant investment. How will it be treated for tax purposes? Will John with a windmill have to register as a business?

Were I government, I would be testing to see how many would take this up. It has the potential to rival (in cost, complexity and amount of regulatory oversight) the set-up of a network of alternative fuel stations nationwide–which might provide greater environmental benefits at the end of the day.

Lots of number crunching to do for this one.